Law firm layoffs — a momentary blip or more?
I read in IPLaw 360 that Sutherland Asbill recently laid off approximately 15 associates. According to the article, several other firms have done the same, including Dechert LLP, Cadwalader and Clifford Chance. Thankfully the layoffs have been relatively small, but the trend does seem to have some traction. Jenner & Block even laid off or demoted equity partners! I see that the NYSE climbed above 13,000 yesterday, but I think another drop is coming. I don’t believe the subprime mess is over. Fortunately our esteemed economists at the various Federal Reserve Banks around the country are coming to the same conclusion. So fellow watercoolerites, what’s your crystal ball saying about your regional legal market. Thumbs up, down or wavering? In my local market it’s a little bit of everything. Being solely focused on intellectual property, our work has been stable to growing, but I know from conversations with colleagues at other firms that not all are fairing as well — with real estate and finance groups (as expected) bearing the brunt of the slow down.
I think it’s just the beginning. Between the $160k 1st year on up, law firms are hurting to keep up with the PPP war. My bff is a recruiter and she has several partner candidates, with books of business, that she can’t place. Firms that are laying off are having a hard time justifying hiring new.In the greater LA market, we’re seeing the bleed, and it’s just the beginning. MoFo’s OC office just closed. Pillsbury has one partner left in OC. Heller is bleeding. I’m hearing rumblings from Sonnenschein.My partners are gossiping in the halls about what’s going on … no one, however, wants to go out and raid. They’d rather hunker down and survive the storm.
Practice diversity. A regional law firm will have practice areas that have peaks and valleys. I don’t know if this is practiced widely, but firms that I have worked with will tolerate a 3 year cycle for an individual lawyer or a practice area – but that’s pushing it. In bankruptcy for instance there are always booms and busts. Real estate and smaller M&As are two others, though not as cyclical as BR. Basic IP, which is what most regional firms (outside of boutiques) practice is becoming a commodity practice, like labor and employment “counseling” or insurance defense. IP practices need to focus on industry niches where the protected ideas or products are hot and hence there are potential (hot) disputes – I won’t get into specifics here, but I’m sure we can all name a a few. There is always money in litigation. Litigators often tell me they can do it all – just bring it on. (Yes, and if you read a book on open heart surgery would you operate on my dog?) Perhaps, but most regional litigators miss the need for a vision. Competition is tough in good and bad times because – any one can do it. The good ones pay attention to demographics, trends, economy, etc. to project where the litigation sh*t is going to hit the fan. I’m not an authority on this, but I believe that insurance def practices who were positioning themselves for a spike in bad faith litigation prior to the down turn were smart. MIA is bustling with corporate bankruptcy filled with layers of law suits and people suing their insurers.
I’m going to take this in a bit of a different direction and talk about legal marketers. Despite the downturn in the economy and what seems to be the beginning of some serious layoffs, the need for legal marketers with experience still seems to be growing. Maybe even more so in an economic crunch. I hear over and over about positions in marketing departments that no one can fill because they make offers only to find that the prospect’s current firm has made a hefty counter-offer to keep them. I can only assume it’s a side effect of a growing need and not enough seasoned vets to go around. Is everyone else still seeing this trend in the downturn?Chin up my friends and hold on tight.
I just had a similar conversation with a Southeastern regional firm MP. In his “circle” of peers the discussion has been about how to “tighten the belts” in anticipation of a situation they expect to remain until 2009. I think smart firms will start making some tough decisions about hiring, salaries, promotions, staffing, other investments, etc. to be better positioned should the economy continue declining or hold as is for at least another year. Sadly, these decisions should just be good business sense all the time – not just precautions taken when anticipating a tougher situation. Firms may even use the economic situation as a reason for making some of the tough personnel choices they should have dealt with regardless.
MESSAGE FROM HEATHER – NOVEMBER 2008What a difference 6 months can make from when TANK posted this. The market is now hovering in the mid-8000 point range, law firm layoffs continue, and law firm dissolutions have started.We are in difficult times, yet we have found a community through social networking. Welcome to the Legal Watercooler.